Mutations in the DSL (Delta, Serrate, Lag2) Notch (N) ligand Delta-like (Dll) 3 cause skeletal abnormalities in spondylocostal dysostosis, which is consistent with a critical role for N signaling during somitogenesis. Understanding how Dll3 functions is complicated by reports that DSL ligands both activate and inhibit N signaling. In contrast to other DSL ligands, we show that Dll3 does not activate N signaling in multiple assays. Consistent with these findings, Dll3 does not bind to cells expressing any of the four N receptors, and N1 does not bind Dll3-expressing cells. However, in a cell-autonomous manner, Dll3 suppressed N signaling, as was found for other DSL ligands. Therefore, Dll3 functions not as an activator as previously reported but rather as a dedicated inhibitor of N signaling. As an N antagonist, Dll3 promoted Xenopus laevis neurogenesis and inhibited glial differentiation of mouse neural progenitors. Finally, together with the modulator lunatic fringe, Dll3 altered N signaling levels that were induced by other DSL ligands.